Greedy banks inhibit stimulus

Original article by Michael Roddan
The Australian – Page: 17 & 21 : 23-Jul-19

Jonathan Mott of UBS has questioned whether the return on equity targets of Australia’s four major banks are "justifiable or sustainable". He argues that these targets could undermine the Reserve Bank’s efforts to stimulate the economy via interest rate cuts, as they reduce banks’ incentive to cut their own interest rates due to the impact on their net interest margins. The differential between the cash rate and banks’ lending rates has widened from less than two per cent prior to the global financial crisis to almost four per cent.

CORPORATES
UBS HOLDINGS PTY LTD, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, CANSTAR PTY LTD

Revealed – the worst default super funds

Original article by Joanna Mather
The Australian Financial Review – Page: 5 : 19-Jul-19

Industry Super Australia’s analysis of data from the Australian Prudential Regulation Authority shows that Hostplus and Cbus are among the MySuper funds that have delivered the best returns over the last five years. However, Max Super is the only retail fund in ISA’s list of the 20 best-performing MySuper funds. The super funds of the Commonwealth Bank and Westpac are among the MySuper funds that delivered the lowest returns over the period.

CORPORATES
INDUSTRY SUPER AUSTRALIA PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, HOST-PLUS, CONSTRUCTION AND BUILDING UNIONS’ SUPERANNUATION FUND, MAX SUPER PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIANSUPER PTY LTD, SARGON, BLACKROCK INVESTMENT MANAGEMENT (AUSTRALIA) LIMITED, AUSTRALIA. PRODUCTIVITY COMMISSION

Super funds post solid returns, but challenging times ahead

Original article by Samantha Bailey
The Australian – Page: 17 & 27 : 18-Jul-19

Data from Chant West shows that the median growth superannuation fund achieved a return of seven per cent in 2018-19. QSuper and UniSuper delivered the best return, at 9.9 per cent apiece, followed by Media Super and AustralianSuper with returns of 8.8 per cent and 8.7 per cent respectively. Growth funds have averaged a return of 8.8 per cent per annum over the last decade, but Ian Fryer and Mano Mhankumar of Chant West warn that the sector faces headwinds and investors should not expect such returns to be sustained. However, Fryer says it is important to note that super is a long-term investment.

CORPORATES
CHANT WEST FINANCIAL SERVICES PTY LTD, QSUPER LIMITED, UNISUPER LIMITED, MEDIA SUPER LIMITED, AUSTRALIANSUPER PTY LTD, HOST-PLUS, SUPERRATINGS PTY LTD

Super returns can’t last forever: Chant West

Original article by Andrew White
The Australian – Page: 31 : 28-Jun-19

Data from Chant West shows that the median growth superannuation fund is on track to deliver a return of 7.1 per cent for 2018-19. It would be the 10th year of positive returns after big losses in 2008 and 2009 due to the global financial crisis. However, Mano Mohankumar of Chant West cautions that the strong performance may not be sustained, noting that super funds have in effect simply been recovering from the financial crisis, while the sector faces a number of headwinds.

CORPORATES
CHANT WEST FINANCIAL SERVICES PTY LTD, STANDARD AND POOR’S ASX 200 INDEX

Balanced super ahead for 10th year

Original article by Natasha Gillezeau
The Australian Financial Review – Page: 8 : 17-Jun-19

Data from SuperRatings shows that the average balanced superannuation fund achieved a return of -0.7 per cent in May. However, the average return for balanced options so far in 2018-19 is 5.1 per cent, putting the sector on track to deliver a positive return for the financial year. SuperRatings executive director Kirby Rappell notes that the return for median balanced super funds is about 8.5 per cent over the last 10 years.

CORPORATES
SUPERRATINGS PTY LTD

Record low bond yields turn off investors

Original article by Jonathan Shapiro, Sarah Turner
The Australian Financial Review – Page: 31 : 31-May-19

The yield on 10-year Australian governments rose to 1.53 per cent on 30 May, having fallen below the official interest rate in the previous trading session. Factor such as the prospect of a rate cut in June and the US-China trade war have weighed on the local bond market, with international fixed income investors now looking at higher-yielding asset classes. Bond managers caution that yields may continue to fall, noting that bonds in countries such as Japan and Germany currently have negative yields.

CORPORATES
JANUS HENDERSON GROUP PLC – ASX JHG, COLCHESTER GLOBAL INVESTORS LIMITED, RESERVE BANK OF AUSTRALIA

Boutique funds emerge as top performers

Original article by David Rogers
The Australian – Page: 26 : 18-Apr-19

Data from Mercer shows that the median long-only Australian share fund achieved a return of 10.9 per cent in the March 2019 quarter, on the back of a 9.5 per cent gain for the S&P/ASX 300 index. Smallco Broadcap Fund, Collins Opportunistic Value Investing and CBG Australian Equities delivered the best returns for the quarter, while the ECP AM All Cap fund was the top performer in the year to March. BlackRock achieved the best return among long-short funds over both three months and 12 months.

CORPORATES
MERCER INVESTMENTS PTY LTD, SMALLCO BROADCAP FUND, COLLINS OPPORTUNISTIC VALUE INVESTING FUND, CBG AUSTRALIAN EQUITIES FUND, ECP ASSET MANAGEMENT ALL CAP FUND, BLACKROCK INVESTMENT MANAGEMENT (AUSTRALIA) LIMITED

Feast of double-digit super returns is over

Original article by James Kirby
The Australian – Page: 26 : 17-Apr-19

New data shows that both balanced and growth superannuation funds achieved a return of just 0.8 per cent in March. The low returns mean super funds may struggle to deliver strong returns for the financial year, after global financial market volatility weighed on returns in the December quarter. Super funds have returned an average of just 3.2 per cent so far in 2018-19, and balanced funds are now unlikely to maintain their recent track record of double-digit returns for the full year.

CORPORATES
SUPERRATINGS PTY LTD, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, RESERVE BANK OF AUSTRALIA

Local banks have world-beating profits

Original article by Michael Roddan
The Australian – Page: 21 : 7-Feb-19

Reserve Bank governor Philip Lowe has noted that at around 13 per cent, Australian banks have a much higher return on equity than many of their international peers. He was unable to provide an explanation for this, but questioned whether local banks’ higher return on equity is sustainable. Meanwhile, ratings agency Moody’s says the Hayne royal commission’s failure to recommend breaking up the four major banks supports the "strong and stable profitability" of the banking sector.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, MOODY’S INVESTORS SERVICE INCORPORATED, AUSTRALIA. PRODUCTIVITY COMMISSION, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Investors eye modest REIT return in 2019: Citi

Original article by Nick Lenaghan
The Australian Financial Review – Page: 32 : 24-Jan-19

Citigroup has forecast a total return of five per cent for Australian real estate investment trusts in 2019. The sector delivered an overall return of 2.9 per cent in 2018, although Citi analysts note that the spread between the best and worst performers was the widest since the global financial crisis. Citi is bearish about the outlook for retail REITs, although the firm has upgraded its rating on several residential REITs to a ‘buy’.

CORPORATES
CITIGROUP PTY LTD, DEXUS – ASX DXS, STOCKLAND – ASX SGP, LEND LEASE GROUP LIMITED – ASX LLC, ABACUS PROPERTY GROUP – ASX ABP, GOODMAN GROUP – ASX GMG, CHARTER HALL GROUP – ASX CHC, WESTFIELD CORPORATION, UNIBAIL-RODAMCO